Coal's Supposed Comeback is a Blip. The Future is Renewable.

In 2020 we constantly heard about the collapse of the coal industry. By contrast today the media hails the renaissance of fossil fuels, the centerpiece of which is the "comeback" that coal is reportedly making, with all that would seem to imply for the greening of the energy base.

Fossil fuels boosters and renewables-bashers across the relevant industries and throughout the media are clearly delighted, but for those who had hoped to see fossil fuels generally on the way out, and relieved to see coal, generally accounted the ecologically worst and most readily dispensable of the lot, finally in terminal decline, this is the kind of nightmare situation which they had hoped safely relegated to the past. What happened to bring it about?

It would seem the situation reflects the extremity of the shock to the world economy amid the pandemic. In 2020 we saw energy consumption drop. As a result the coal sector, which was increasingly marginal, suffered severely, encouraging the view that it was on its way out. The economic recovery from that extreme shock--combined with the inflation into which many factors, not least expansionary monetary policy, have fed--has seen demand for energy from whatever source soar. Meanwhile coal-fired power stations have been running at lower and lower capacity for a long time (under 48 percent in 2019, 40 percent in 2020), so that even after massive shutdowns of coal stations over the past decade there was considerable extra capacity here when demand went up, with the result more call on coal-fired plants, which burned through more coal.

Of course the mobilization of spare coal-fired capacity is one thing. The economic incentive to, for example, build new coal-based electricity generation instead of natural gas-burning facilities, or the renewables-based generation that is cheapest of all, is quite another thing--a matter not of a short-term crunch that may be only very temporarily making established coal capacity economically for a while, but the longer-term prospect. Especially as there has been no revolution in the efficiency of coal mining and coal-based electricity production, and no really fundamental decline in the efficiency of production from other sources, there seems no basis for thinking that the coal sector has somehow regained its competitiveness with them. Quite the contrary, it seems that the longer-term trend has coal's decline continuing. Yet the fact remains that this event is feeding the illusions among the many influential parties that desperately want to believe otherwise--their bias in favor of fossil fuels, the "short-termism" afflicting far too much decision making in business, and the shallowness of the media coverage and analysis of the phenomenon encouraging a bias in favor of continuing investment here, in spite of the warnings that such investment is likely to end up stranded, and coming at the pace of that already too oft-delayed shift to other technologies which are likely to prove financially sounder in the long run.